Girl Scout Cookie Economics

Last year, a pricier Thin Mint was a controversial decision by the San Diego Girl Scout Council. Among 112 councils in the U.S., San Diego was one of several to raise its prices. This year others will follow.

Where are we going? To cookie economics.

But first, more about the cookies.

Some Changes

Each of the 112 Girl Scout Councils in the U.S. has to decide whether to raise its cookie prices. Typically moving from $4 to $5 a box, the trend is a 25% increase. But the big change is no separate delivery. Instead of waiting for weeks, many of us will get our cookies when we order them.

Also, the taste of the cookies could change if we move. Because they have two different bakers, thin mints have a smooth chocolate coating in L.A. but not in San Francisco (and one is mintier). And, as the LA Times quips, Fort Worth has Do-Si-Dos while Dallas do-si-doesn’t.

You can see below how ABC Bakers and Little Brownie Bakers have split the nation. Little Brownie Bakers (in violet) make the thin mints with a smoother chocolate coating. To get Do-Si-Dos, you need to be in an ABC region:

The new cookie line-up:

https://www.youtube.com/watch?v=ADp5IKnlmdI

Our Bottom Line: Cookie Economics

Hoping price hikes and direct sales will increase revenue, the Girl Scouts are relying on two economic phenomena.

1. Price Hikes and Inelastic Demand:

Their website indicates that even though price was up 25%, volume only went down 10% to 15%.  When price pops by a bigger percent than the proportional decline in volume, we have a perfect example of inelastic demand. With inelastic demand, total revenue rises when price goes up.

2. Direct Sales and Short term gratification:

Behavioral economists say that most of us prefer immediate pleasure rather than waiting for an even better pay-off. The switch to direct sales means we can enjoy our cookies instantaneously rather than placing an order that won’t arrive for weeks. The instant satisfaction could create bigger sales.

You can see why the Girl Scouts switched prices and deliveries.

My sources and more: Providing a springboard, this WSJ blog on Girl Scout cookies introduced the issues. But for the details I recommend this LA Times article, the numbers from the Girl Scouts, and a 2017 update from Time.